Baxter (BAX) Break-Up Resembles Abbott/Abbvie - Deutsche Bank
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Rating Summary:
14 Buy, 13 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 9 | Down: 6 | New: 4
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Deutsche Bank analyst Kristen Stewart on Baxter International (NYSE: BAX) amid news the company will split and two and the subsequent spike higher in the stokc.
Stewart said this split most closely resembles that of Abbott and Abbvie as ABT shares had been trading at a discount due to the overhang of Humira. In Baxter’s case, the overhang is due to the pending competition for its Factor VIII business from Biogen and others, she said.
"The stock is trading higher in pre market trading. BAX shares trade at 13x our 2015 cash EPS estimate ($5.35) which is a 2-3x discount to other hospital supply names. We believe ABBV is the best comparison on the Bioscience side, which trades at 14.2x 2015 Thomson Reuter’s estimates, rather than the rest of the more growth Bioscience names. In our view, one needs to better understand the potential one-time charges and dis-synergies associated with the deal to provide a better view on valuation. The focus for Baxter now will be on giving more insights into the pipeline to justify a higher multiple on Biosciences and giving comfort on assuring it can defend the competition in Factor VIII. At this time, we maintain our Hold." (PT $71)
For an analyst ratings summary and ratings history on Baxter International click here. For more ratings news on Baxter International click here.
Shares of Baxter International closed at $70.08 yesterday.
Stewart said this split most closely resembles that of Abbott and Abbvie as ABT shares had been trading at a discount due to the overhang of Humira. In Baxter’s case, the overhang is due to the pending competition for its Factor VIII business from Biogen and others, she said.
"The stock is trading higher in pre market trading. BAX shares trade at 13x our 2015 cash EPS estimate ($5.35) which is a 2-3x discount to other hospital supply names. We believe ABBV is the best comparison on the Bioscience side, which trades at 14.2x 2015 Thomson Reuter’s estimates, rather than the rest of the more growth Bioscience names. In our view, one needs to better understand the potential one-time charges and dis-synergies associated with the deal to provide a better view on valuation. The focus for Baxter now will be on giving more insights into the pipeline to justify a higher multiple on Biosciences and giving comfort on assuring it can defend the competition in Factor VIII. At this time, we maintain our Hold." (PT $71)
For an analyst ratings summary and ratings history on Baxter International click here. For more ratings news on Baxter International click here.
Shares of Baxter International closed at $70.08 yesterday.
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